We have seen and reported on a few actions that have been occurring over the last year in terms of the pressures on banks and payment processors. Recently, Chase has closed several checking accounts for people associated with the adult industry. The outcry has resulted in a very prestigious publication taking notice. The American Banker article that addresses this recent phenomenon is an excellent read that brings up several important points and followup questions for the reader.
Banking seemed to be a service that every legal business, and US citizen was entitled to but with the recent activity it is now evident that this is not the case. The banking system, which is regulated by the US government, can discriminate against who it offers it’s services to.
To read the full article you can go here.
By Melody Lashmar Operation Choke Point and increased pressure by bank regulators on Financial Institutions to identify and eliminate merchant fraud has certainly increased the monitoring efforts by banks regarding their payment services. Under Operation Choke Point, Financial Institutions, ISOs and IPSPs are being held liable and accountable for their merchants’ fraudulent activities.
The FTC has communicated that Financial Institutions and payment processors know or should have known about any deceptive acts or practices of their merchants. They lean on the assumption that Continue reading
March Madness is here! Only I’m not referring to the NCAA basketball tournament, but L3’s travel schedule for the next few weeks. Despite the hustle and bustle of L.A. traffic and crowded airports, we’re excited to get back out there and discuss the myriad services L3 has to offer to new and existing merchants alike. Look for us at both the MAC Conference from March 11th – 13th in Las Vegas, and at the Phoenix Forum from March 27th – 30th. This month in useless trivia…did you know March starts on the same day of the week as November every year? Also, Daylight Savings Time begins in March and ends in November. With all that these two months have in common, I’m proposing we really seal the deal by celebrating my favorite U.S. holiday, Thanksgiving, in March too. Show of hands, who wouldn’t want two 4-day weekends and two Thanksgiving dinners per year? Exactly. If you haven’t already read Melody’s latest article titled “Six suggestions for Merchant Payments regarding Operation Choke Point”, I would strongly recommend taking the time to do so. Melody provides valuable information that could prevent you from being collateral damage when “the powers that be” make rash decisions in an effort to stop bad merchants. As discussed in Melody’s article, one of the most important factors in maintaining your business and its payment processing health is choosing a payment-processing partner that is committed to long-term success. And SBW is the perfect solution! With direct banking relationships, comprehensive intelligent routing technology and a robust, leading-edge fraud shield built around extensive empirical analysis, merchants can feel confident that their business is protected on all fronts. Contact us today at 1-877-282-9057 or email@example.com for more information about our PCI Certified Credit Card and ACH Gateway services. Don’t forget to follow L3 on Facebook and Twitter for ongoing news and updates. Until next time, have a great month!
By Melody Lashmar The phrase “Operation Choke Point” conjures up many images and is representative of the spirit in which the authorities are using their power to target the providers within the payment industry.
Operation Choke Point is, in fact, the name that the authorities have given their combined efforts in stopping bad merchants by removing the payment processors that these merchants are using. I think that we can all agree that stopping bad merchants is a worthy endeavor, but the way in which it is being executed is causing unnecessary and unfair collateral damage to other merchants, consumers and payment processors.
Their “choke point” focus is akin to stopping illegal marijuana grow houses by Continue reading
By Melody Lashmar The Ivory Tower of Officialdom is at it again. They have spent time and resources on developing ways to reduce fraud in their network and they now want people’s opinions on their solution.
The current proposed solution is…. wait for it…. to do more of the same! Wow, what a brilliant idea; an absolutely stunning example of understanding the issues that exist and creating a solution which addresses those issues and, thus, reduces fraudulent payments.
Fraud is being measured based on Continue reading
By Melody Lashmar
Have you ever stood at a checkout line, swiped your card of choice and then were told that it had failed? When that happens, what is your next move? Many of us will Continue reading
By Melody Lashmar There are many things affecting an online merchant’s ability to stay afloat in the competitive Internet marketplace. A downturn in the economy, business rivals with a similar product on the market and dwindling consumer confidence can all take a toll on your profits. In addition to these factors is the very real threat of e-commerce fraud, one of which is deceptive chargebacks.
One example of a chargeback situation that had devastating consequences is a travel company that recently closed its doors. Several customers who paid for their tickets online by credit card then turned around and contacted their card issuers to initiate a chargeback because they weren’t able to take the trip they paid for. If you think you wouldn’t be held liable for this type of chargeback, think again. If the transaction is charged back for any reason, including fraud, the merchant has to pay for the chargeback. Even if the situation is resolved in the seller’s favor, and they’re able to recoup the cost of the stolen merchandise or services, chargeback fees can add up.
It isn’t just veteran scam artists who are engaging in e-commerce fraud. Hard economic times might cause the average customer to “steal” products from an online retailer by saying he or she never received the product that was ordered. For example, a well-meaning consumer may have made a large online purchase for a flat screen television, but then found himself out of work the next day, so he may claim the television was never received. These types of scenarios can be frustrating for hard-working merchants who are trying to develop a loyal customer base and boost their bottom line.
In the ever-evolving world of online fraud, there are very strict time frames that are imposed on a merchant to contest a chargeback. If the merchant does not reply in the required time period, the chargeback cannot be contested and the merchant has to pay the chargeback regardless of whether a merchant has proof that the merchandise was delivered. This translates to emboldened consumers who make “friendly” chargebacks, believing they have little to risk. In some cases, card issuers are not aggressive in pursuing their customers for fraud.
As a business owner, you need to be proactive about chargeback abuse to stop scam artists in their tracks. One way to be diligent is by analyzing sales records. This can help you identify customers who charge back items on a regular basis and give you the opportunity to decide whether you want to continue doing business with them. Also, there is information available online that helps you determine which zip codes are notorious for online theft, so you can remain on high alert when a buyer asks you to ship to that area.
We live in a society where many people want to get something for nothing. This is especially true in the retail world. Rather than paying for merchandise received, some deceitful consumers would rather “steal” their purchases by either claiming their credit card was stolen and they were charged for items they didn’t order or by stating they never received the item in the mail. Whatever the excuse, this causes an unwanted financial drain on the unsuspecting merchant. Not only do they lose the goods they shipped, but they also lose out on the amount they would have made on the sale.
Digital thieves have gotten creative about the ways they swindle gullible online retailers. In one case of e-commerce fraud, a man purchased merchandise from an Internet merchant and upon checkout, he registered with many different variations of his name and address. The hustler then initiated chargebacks claiming he never received the products. The small business owner grew suspicious and asked the police to launch an investigation. The authorities discovered that the con man was buying and reselling the products he purchased.
Although you may think something like the above scenario can never happen to you, think again. Chargeback-related fraud is on the rise as scam artists grow more sophisticated in their schemes to defraud merchants. The Better Business Bureau (BBB) offers the following tips for fighting friendly fraud:
- • Use a shipping service that tracks delivery. Some shipping firms provide tracking information and signature confirmation. This information can help verify whether or not the customer really received the product.
- • Deactivate or deny access to products. If you are a retailer who offers downloads or access to websites, you can stop a scam artist by denying access to your services.
- • Present a solid case to the credit card company. If you are diligent about maintaining records – including records of delivery or reimbursement and your return policy – this will greatly assist the credit card company and increase your chances for a favorable resolution in the case of a chargeback.
By Melody Lashmar
You have some ‘splainin to do
Things have been going along just fine but, seemingly out of nowhere, you are getting questions on your merchant processing. Technically, you are compliant with the payment association rules, so why all these questions? It seems that the things you used to do are now not accepted and things that were previously forbidden are now allowed again. And round and round we go. Perhaps the contradictory activities are best explained by some of the information provided in this article.
The FTC has been very busy recently Continue reading